Deductions & credits

I will address both of your issues, please read to the end.

Excess HSA contributions are carried over every year, in the hope that the excess can be used in the next year. So this appearance of the excess from 2021 in your 2024 return is to be expected, because you have not cut off the carryover.

To cut off the carryover, you need to make a distribution of $194 and when the 1099-SA comes, enter it in the next return (2025) and be sure to say that it was NOT for medical expenses. As a result, the $194 will be added to Other Income and a 20% penalty will be added as well.

Now the carryover will be extinguished for good. This is good because you will never be able to contribute to an HSA again, since you are on Medicare.

Note that the penalty for having a carryover of excess contributions is 6% of the LESSER of the amount of the carryover OR the value of your HSA at the end of the tax year. Thus, when your HSA value goes to zero, so will the penalty.

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In the Review, TurboTax gets confused when it sees a taxpayer with a form 8889 but who did not indicate what type of HDHP coverage he/she had. So it insists that you enter Self or Family on line 1 on the 8889 and won't let you continue.

The workaround is to enter Self on Line 1 (or Family, it doesn't matter), so that you can continue.

Since in the HSA interview you told TurboTax that you were on Medicare (all year, I presume), the numbers on form 8889 will be correct.

Now you can continue.